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Council starts process for trash hauling rate increase 

Paso Robles City Council solid waste

Paso Robles resident Cody Ferguson addresses the council. Photo by Heather Young

Rates could increase about 14 percent in three years

The Paso Robles City Council voted 5-0 to begin the Proposition 218 process to consider rate increases proposed by and for Paso Robles Waste and Recycle at its meeting on Tuesday. The trash hauler requested that rates be increased due to them not adjusted since 2008 and tipping fees at the city landfill increased in July.

Paso Robles Waste and Recycle requested that rates be increased 10 percent in the first year, another 1.33 percent the second and 3.16 percent each year for the following three years. The company has a hauler franchise agreement with the city, which requires Paso Robles Waste and Recycle to prepare rate studies and provide all rate setting calculations, proposals and substantiation in support of the proposed adjustments.

All studies and evaluations, said Christine Halley, the utility consultant for the city, must comply with Proposition 218 — Article 13D, Section 6b — which requires that increases fees or changes adhere to the following requirements:

  1. Revenues derived from the fee or charge shall not exceed the funds required to provide the property related service.
  2. Revenues derived from the fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed.
  3. The amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the parcel.
  4. No fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Fees or charges based on potential or future use of a service are not permitted. Standby charges, whether characterized as charges or assessments, shall be classified as assessments and shall not be imposed without compliance with Section 4.
  5. No fee or charge may be imposed for general governmental services including, but not limited to, police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Reliance by an agency on any parcel map, including, but not limited to, an assessor’s parcel map, may be considered a significant factor in determining whether a fee or charge is imposed as an incident of property ownership for purposes of this article. In any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance with this article.

The city is responsible for examining the supporting documentation provided by the company to determine whether the requested service rate increase is justified, preparing and circulating the protest ballot/hearing notice, conducting the required hearings and other required public meetings, and exercising final approval/denial over the proposed rates. Paso Robles Waste and Recycle is responsible for the costs of preparing the audit, rate student and rate setting calculations, as well as the city’s review and analysis for compliance with Proposition 218.

Halley said that the franchise agreement allows for the company to suspend payment of the increased tipping fees when the request is placed, so Paso Robles Waste and Recycle has not been paying the increased fees since August.

“We thought we’d be done by the end of the year,” said attorney Terry Schubert, the representative for Paso Robles Waste and Recycle. Halley said that the rate study will most likely go back to the council in May, because the Proposition 218 process is complicated and with the required analysis, noticing and public hearings, the ballots will likely not be sent to customers until spring 2015.

The cost for completing the audit and Proposition 218 process is estimated at $90,752, which Schubert said is double the initial costs the applicant was expecting. Schubert said he has not yet seen the contracts that the city will enter in with the consultants, but requested that the costs be firm and fixed-rate.

“I think Paso Robles Waste and Recycle is due a rate increase,” Paso Robles resident Cody Ferguson said.

Resident Tom Hardwick asked if the money to pay for the consultant would be passed on to the rate payers. Halley said that any way it’s looked at, the rate payers will be paying for the Proposition 218 process because the money that the company makes comes from its customers.

“That is an eligible expense [that can be passed on to rate payers],” Halley said, adding that how quickly the process goes depends on the flow of information between the city and the hauling company.

“Come on, can’t we do something about these costs and the time?” Newly sworn-in Councilman Jim Reed asked. “Or does it really have to go $90,000?”

Mayor Pro Tem Fred Strong said that the voters approved Proposition 218, so it has to be followed, unless the voters overturn it.

To save time, the city is not required to go through a bid process for hiring a consultant for this. City Manager Jim App said that the city is required to hire the best qualified firm. To do so, staff recommended the city use the same team that performed the 2011 Solid Waste Franchise Contracts Financial and Operational Audit. The council authorized the city manager to enter into “not-to-exceed” contracts with R3 Consulting Group, Inc. and TJ Cross Engineers.

The preliminary cost breakdown:

  • Audit Services $49,580
  • T.J. Cross contract management $ 9,950
  • Legal Services $15,000
  • Balloting Process $ 6,000 (printing, mailing, etc.)
  • City Services $ 3,500 (city staff time)
  • Contingency (8%) $ 6,722
  • Total: $90,752

 

Mayor Steve Martin said that while going through the bid process could save some money, it will take more time. The council then discussed other options such as not complying with Proposition 218 regulations, paying for the consultants out of city funds, use the hauler’s documents and not hire an outside firm and more. In the end, the council went forward with the staff recommendation.

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